This is the second blog addressing the new requirement for private Ontario corporations to maintain a register of individuals with significant control over the corporation (the “ISC Register”). In my earlier blog, I outlined who individuals with significant control are, what information must be listed on the ISC Register, and where the ISC Register must be kept. This blog addresses required updates to the ISC Register, the shareholders’ obligations with respect to the ISC Register, disposal of information on the ISC Register, access to the ISC Register, and the penalties for non-compliance with the new requirements.
When Must the ISC Register be Updated?
The ISC Register must be reviewed and updated at least once during each financial year of the corporation. Private corporations are required to take reasonable steps to ensure that they identify all ISCs and that the information in the ISC Register is accurate, complete, and up to date. In addition, private corporations must update the ISC Register within 15 days of becoming aware of any relevant information that would necessitate a change to the ISC Register.
What Must the Shareholders Do?
The shareholders of the corporation must promptly and to the best of their knowledge reply accurately and completely to any requests by the corporation for information required for the ISC Register.
When Should the Information on the ISC Register be Disposed of?
Within 1 year after the 6th anniversary of the day on which an individual ceases to be an ISC, the corporation must dispose of any of that individual’s personal information that is recorded in the ISC Register, unless a longer retention period is required by law or court order.
Who Has Access to the ISC Register?
There is no requirement for the ISC Register to be publicly available, nor is it required to be disclosed to shareholders or creditors of the corporation. However, access to the ISC Register must be provided to the following, upon request:
- police forces
- Ontario and federal tax authorities
- certain regulatory bodies, including the Ontario Securities Commission, the Financial Services Regulatory Authority of Ontario, The Financial Transactions and Reports Analysis Centre of Canada
- the Minister
What are the Penalties for Non-Compliance?
A corporation may be fined up to $5,000 for failure to, without reasonable cause, maintain the ISC Register, to respond to requests for information, or provide a copy of the ISC Register or the information contained in the ISC Register as specified in a request for information.
Directors and officers of a corporation may be fined up to $200,000 and/or imprisoned up to 6 months for knowingly authorizing, permitting, or acquiescing in any of the following:
- the corporation’s failure to comply with the requirements relating to the maintenance or disclosure of the ISC Register, regardless of whether or not the corporation was prosecuted or found guilty of the non-compliance
- the recording of false or misleading information in the ISC Register
- the provision to any person or entity of false or misleading information in relation to the ISC Register
Shareholders who knowingly fail to respond, as required under the legislation, to a corporation’s request for information regarding the ISC Register may be fined up to $200,000 and/or imprisoned up to 6 months.
As such, if they have not yet done so, private Ontario Corporations should promptly take steps to gather the required information and prepare their ISC Registers to ensure compliance with the new transparency requirements.